Q2 Bankruptcies up 6.5 Percent

By Aisling Maki

Bankruptcy filings in West Tennessee increased overall in the second quarter of 2012, although Chapter 7 bankruptcies, filed by the most hard-pressed debtors, fell slightly, according to The Daily News Online, www.memphisdailynews.com.

All chapters combined – Chapters 7, 11 and 13 – amounted to 3,093 Shelby County bankruptcies for the April through June period, up 6.5 percent from 2,904 in Q2 2011.

Overall, June had the most filings with 1,074, followed by 1,068 in May and 951 in April.

The United States Bankruptcy Court for the Western District of Tennessee has offices in Memphis and Jackson. However, the data in this report include only ZIP codes within Shelby County. In effect, it examines the number of bankruptcies filed by Shelby County debtors in local bankruptcy court.

Chapter 13 bankruptcies, or “wage-earner” cases, which involve a court-ordered debt repayment plan, rose to 2,351 in Q2, up 10.7 percent from 2,123 in Q2 2011.

“That allows them to set up a plan to prevent foreclosures and maybe save their car or whatever it might be,” said Memphis bankruptcy attorney Philip Counce of The Law Offices of Philip F. Counce.

June saw the highest number of Chapter 13 filings in the county with 843. May had 822 filings while April had 686.

Frayser’s 38127 ZIP code led Q2 Chapter 13 filings with 202. It was followed by Westwood’s 38109 with 193, Whitehaven’s 38116 with 191, Raleigh’s 38128 with 180, and Oakhaven/Parkway Village’s 38118 with 173.

“In 2009 and 2010, we would see a lot of people who were not working full time or their income had gone down, and they owned property and didn’t really care to keep the house because the values had declined,” said Counce, who has more than 30 years of experience practicing bankruptcy law. “I believe that trend is reversing and I’m seeing people coming in now wanting to opt for Chapter 13 to maybe save the house or the car payment they’re behind on.”

While Chapter 13 filings increased, Chapter 7 bankruptcies, filed by the most hard-pressed debtors who usually get to wipe away most of what they owe, fell 4.9 percent in Shelby County to 733 in Q2, compared to 771 in Q2 2011.

April saw the most Chapter 7 filings with 262, while May recorded 242 and June saw 229.

Raleigh’s 38128 ZIP saw the most Chapter 7 filings with 55, followed by Southeast Shelby County’s 38125 with 53; Cordova North’s 38016 with 50; Westwood’s 38109 and Whitehaven’s 38116, each with 40; and Bartlett’s 38134 with 38.

“Up until recently, a lot of people would come in and say they didn’t even really want to keep their house,” Counce said. “A lot of properties in their neighborhoods were vacant or foreclosed on and they wanted out from under it. They owned more than the house was worth and they were struggling anyway because of their income. But I’m beginning to see a change in all of that, but I wouldn’t say it’s dramatic yet.”

One of the quarter’s notable Chapter 7 bankruptcies was that of Memphis City Council member Janis Fullilove, who filed in May.

The filing listed $22,218 in liabilities owed in “taxes and certain other debts owed to governmental units,” as well as $52,360 in secured claims held by creditors and another $29,760 in unsecured non-priority claims.

On the business side, Chapter 11, or reorganization, bankruptcy filings saw a very slight decrease in Shelby County, with nine filings in Q2 compared to 10 in Q2 2011.